Granting permission for more North Sea production is unlikely to lower prices or reverse overall decline
email rounding up the latestIn recent months, Just Stop Oil protesters have glued themselves to central London roads, blockaded entrances to petrol stations, stopped traffic on a key bridge in the UK capital, attempted to disrupt the British Grand Prix motor race, and thrown a tin of tomato soup over Vincent van Gogh’s “Sunflowers” at the National Gallery.
Protesters have signalled that they will mount a legal challenge. Environmental group Greenpeace claimed the new licensing round was potentially “unlawful” and indicated it would aim to block it in the courts. Climate campaigners have stressed that the UK government’s attempts to secure more oil and gas from the North Sea conflicts with its commitment for the UK to have net zero carbon emissions by 2050.
Despite this, Offshore Energies UK, the industry trade body, argues that oil, gas and electricity still provide almost three-quarters of the UK’s energy needs, so it is necessary to maintain domestic production to reduce reliance on imports. Last year, Britain imported 62 per cent of its gas needs and 18 per cent of its oil, according to an Offshore Energies report.
However, while Offshore Energies says production can be increased, even it acknowledges that, after 50 years of exploration, the North Sea is a declining field. Output has been falling by about 5 per cent a year and the deposits that are left are generally harder to extract. Andrew Latham, an analyst at Wood Mackenzie, says there are only “modest” opportunities in the North Sea and he doesn’t see much scope for that to change. “There are occasions where there is a surprise find, but it’s unlikely,” he notes.
The shift to renewables means there is less certainty about the duration of demand — and that affects the appetite from the larger oil and gas developers to pump resources into the Continental Shelf. “If you’re not sure how much oil and gas is going to be needed, you don’t want to invest,” Latham explains. “A lot of the message is that fossil fuels aren’t wanted.”Andrew Latham
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